From Dream to Steam: the two faces of geothermal energy

Indonesia is sitting on a geothermal goldmine, with the potential to power millions of homes and create new industries. But tapping into this resource has not been easy. Geothermal projects often face opposition from local communities worried about the environmental and cultural impacts, while companies see endless opportunities for clean energy and profit. The solution? A hybrid approach that combines direct and indirect geothermal energy use, benefiting both businesses and the people living near these projects.

The Two Faces
There are two main ways to use geothermal energy: direct and indirect. Indirect use involves converting geothermal heat into electricity, while direct use applies the heat for non-electric purposes like agriculture, tourism, and industry. Each method has its advantages, and together, they can address the needs of both communities and companies.

For too long, experts have focused on these strategies in isolation, often seeing direct use only after a project’s electricity generation phase has ended. But there’s no reason why they can’t work in tandem. Running both approaches at the same time can amplify the benefits while addressing concerns over safety and environmental impact.

Winning Over Communities with Direct Use
Local communities in Indonesia have a history of pushing back against geothermal projects. In places like the Dieng Plateau and Mount Slamet, residents protested over fears that drilling could damage farmland, contaminate water sources, or disrupt sacred sites. In Bali, the Bedugul project was halted due to concerns it would violate cultural beliefs.

Direct use can help soothe these tensions. By using geothermal heat to boost local economies, communities get to see immediate, visible benefits; for example, geothermal-heated greenhouses can improve crop yields, providing a stable food supply and new income streams. In tourism areas, hot springs can be turned into wellness destinations, attracting visitors and boosting local business.

This kind of direct benefit creates a strong incentive for communities to support geothermal projects, seeing the value for themselves. As local businesses thrive and agricultural production increases, it becomes easier to justify geothermal development.

Electricity Generation: Powering the Future
While direct use offers tangible benefits to communities, indirect use is the key to unlocking geothermal’s larger economic potential. Indonesia’s demand for clean, renewable energy is skyrocketing, and geothermal electricity generation is one of the country’s best options. Geothermal plants provide a stable, reliable energy source that is not subject to the price fluctuations of fossil fuels. For businesses, this means predictable energy costs and the ability to market themselves as environmentally conscious, which is increasingly important for investors and consumers.

But it is not just about the bottom line—geothermal energy can also help Indonesia reduce its carbon footprint. As the country shifts away from coal and oil, geothermal power will play a critical role in meeting renewable energy targets and ensuring long-term energy security.

The Case for Combining Both Approaches
The real game-changer comes when you combine direct and indirect geothermal use. By running these projects in parallel, companies and communities both stand to gain; for example, the excess heat generated by a geothermal power plant can be diverted to support local direct-use applications, maximizing the resource’s potential. At the same time, communities benefit from job creation, increased food security and a boost to tourism, while companies profit from electricity sales.

This kind of synergy creates a win-win situation. It helps reduce opposition from local communities, who now see tangible benefits from the project. At the same time, companies can continue developing their power generation capabilities without the delays and conflicts that often come from community pushback.

Legal and Technical Maze
Of course, it is not as simple as flipping a switch. Indonesia’s regulatory framework around geothermal energy is complex, with different rules governing direct and indirect use. Companies need separate licenses for each, and the zoning laws can be a headache, especially in areas like protected forests or conservation zones.

In addition, managing geothermal resources for both direct and indirect use is not easy. Using the same resource for power generation and direct heating could deplete the thermal energy supply faster, risking the long-term sustainability of the project. Engineering challenges also arise when trying to integrate both systems, as not all geothermal fields are suited for dual use.

Despite these complexities, the benefits far outweigh the challenges. With careful planning and coordination between regulatory bodies, geothermal companies can navigate these obstacles and create projects that are both profitable and sustainable.

Building a Sustainable, Inclusive Future
The potential of geothermal energy in Indonesia is enormous. By combining direct and indirect use, Indonesia can harness this resource to fuel its growing economy while also providing immediate benefits to local communities. This approach aligns with global sustainability goals and positions Indonesia as a leader in renewable energy development.

More importantly, it fosters stronger relationships between companies and the communities they operate in. When locals see the benefits of geothermal projects—whether through increased agricultural production or new tourism opportunities—they’re more likely to support further development. This reduces the risk of delays and conflicts, allowing projects to move forward smoothly.

For companies, this means not only a more stable operating environment but also enhanced corporate social responsibility. By actively contributing to the welfare of local communities, businesses can strengthen their social license to operate, ensuring long-term project success.

The Path Forward
Indonesia is on the cusp of a geothermal revolution. The combination of direct and indirect use offers a unique opportunity to maximize the benefits of geothermal energy while addressing the concerns of local communities. By adopting this dual strategy, companies can unlock new revenue streams, reduce opposition and help build a more sustainable future for Indonesia.

Geothermal energy is no longer just a dream for Indonesia—it is ready to steam ahead.

About ADCO Law:

ADCO Law, AGA’s representative law firm in Indonesia is a law firm that offers clients a wide range of integrated legal services, including commercial transactions and corporate disputes in a variety of industry sectors. Over the course of more than a decade, we have grown to understand our clients’ industries and businesses as well as the regulatory aspects. In dealing with business dynamics, we provide comprehensive, solid legal advice and solutions to minimize legal and business risks.

From Upstream to Downstream, We understand your industry and in complex transactions and certain cases, we actively engage with financial, tax, and environmental specialists, accountants, and law firms from various jurisdictions to add value for our clients. Our strong relationships with government agencies, regulators, associations, and industry stakeholders ensure that our firm has a holistic view of legal matters.